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Home My WebLink About1980-0348.Knudson.81-12-08Between: Mr. Ronald Knudson 34E/'JO IN THE MATTER OF AN ARBIT-WTXON Under THE CROWN EMPLOYEES COLLECTIVE EARGAINING ACT Sefore THE GRIEVANCE SETTLElMENT BOAhD Before: -And - The Crown in Right of Or,tario (Liquor Licence Board of Jntario) Employer Prof. J .w . Sauc$ls Vice ,Cha.irm+n MS. M. Perrin Member KS. B. Lanigan ;*!elIlbS-r For the SrieTJor: YLS. E. Lennon, Counsel Golden-Levinson For the Enplover: Fir. C. G. Rig,-s, Counsel - - iiicks, %rle:~, Uaril-xn, Sttsazt b Storie Hearings: Ssptember 14, 103; Xo-ember 16, 15El Contents 2 Introduction .......................................... 3 Mitigation ............................................ 3 . Overtime.................................- ............ 4 Interest .............................................. 5 Conclusion ............................................ 7 Exhibits.............................~.........-...~ .. 9 Introduction 3 In our award of March 10, 1981, we reinstated Mr. Knudson to his position as a liquor licence inspector. We reserved our jurisdiction concerning the matter of mitiga-. tion of damages and the amount of compensation. Following the award, the Liquor Licence Board im- mediately reinstated the qrievor and, in July 1981,~paid to him $22,438.37, being the amount of regular salary he would . have earned had he not been discharged. This sum was paid without an admission of any particular liability, because the issue of mitigation remained outstanding. ' The parties have been unable to reach full aqree- ment on the outstanding matters. They have returned to this Board for its decision on'three issues: a. Did the qrievor make reasonable efforts to mitigate his losses? And ,. if not, what is the effect of this failure on the amount owing to him by the Liquor Licence Board? b. Is the grievor entitled to be compensated for the overtime hours he would have wor,ked during the period of discharge? _ C. Is the'qrievor entitled to interest on the monies.owed to him? Mitigation Following the discharge, the grievor was obligated to make reasonable efforts to mitigate his losses. The onus falls on the employer to show that this was not done: Re - Firestone Steel Products of Canada Ltd. and United Automobile Workers, Local 27, Unit 7 (1974), 6 L.A.C. (2d) 18, at 19-20 (Weatherill); and Red Deer College V. Michaels (1975), 57 D.L.R. (3d) 386 (S.C.C.). We heard evidence of Mr. Knudson's efforts to find other employment (Exhibits 3, 4, and 51, Andy of the wide- spread press coverage concerning his case (Exhibit 1). It apEears that, in the two years of his suspension without pay and then discharge, he made repeated calls on 12 potential employers, seven of whom were involved in the alcoholic beverage industry. In my view, these efforts were not sufficient, in spite of the terrible publicity given to his case: The employer's obligation must be reduced to some extent, because of this failure by Mr. Knudson to mitigate his losses. Overtime As we explained in our earlier award, while Mr. Knudson worked 50 to 55 hours per week, he never received, claimed or expected any monies by way of overtime pay. This :qas the accepted practice. The evidence now shows that, during the period he was off work, most probably because of our first award, a grievance was filed by an inspector for 'overtime on the weekend and this resulted in modest payments to a number of inspectors'who had not taken all the lieu days they had earned. There is still a dispute between the Union and the Liquor Iicence Board as to whether these payments should have been at straight time or at l-1/2 times the regular hourly rate. The highest payment was around $900 (Exhibits . 7, 8, 9 and 10). No grievance has been filed,,and no monies paid, in respect of any overtime worked during the normal working week. hr. Knudson .claims $18,914.09, being 13 hours per week at the hourly rates he would have been paid had he not been discharged. In my view, the grievor should be compensated in order to return him to the position he would have been in haa he not been discharged. In the first place, I doubt that the overtime system would have been changed at all, had it not been for our earlier award. Secondly, in any event, had Mr. Knudson not been discharged, it is almost certain that he would have received no more than a modest amount in the overall overtime settlement. Therefore, he is entitled to this modest amount for overtime he would have worked. Interest Where a grievor's claim is for monies not paid at the correct time under the contract, recent asbitral juris- 5 . 6 prudence has accepted the possibility of an award of in- .terest as part of the monetary compensation, in order to put the griever in the financial position he would have been in had the monies been paid on time: Hallowell House Ltd., [1980] O.L.R.B. Reports 35; Re Air Canada and Canadian Air Line Employees' Association (1981), 29 L.A.C. (Zd) 142 (Picher); McXellar General Hospital and S.E.U., Local 260 (Prichard, July 9, 1981, unreported); Thamesview Lodge and S.E.U., Local 210' (Samuels, August 25, 1981, unreported): C.F.B.~ Borden Board of Education and F.N.T.A. (Swinton, " February 3, 1981, unreported). While this principle has not yet been decided by this Board, there is no reason why the same result shculd not prevail here. The simple fact is that, without an award of interest, the late payment of a sum owing is not full compensation, especially in times of very high interest rates. Article 22.2(b) of the Collective Agreement gives this Board jurisdiction to reinstate an employee "with full compensation . ..". I accept the formula suggested by Ms. Lennon for the calculation of interest owing on lost wages. It is a derivative of the Hallowel House formula. a. Take the total amount owing: b. Divide it by 2, in order to reflect the fact that, .at the outset only one wage payment was delinquent, and so on to the date of rein- statement, when all the wage payments were owing: C. Apply the appropriate annual interest rate pro-rated over the period over which the monies were owing to the date of reinstate- ment; . 7 i d. Then, take the total amount owing at the time of reinstatement, and apply the appropriate annual interest rate pro-rated over the period from the date of reinstatement to the date of payment. For this last calculation, do not divide by 2, because you are not dealing with an increasing liability but a fixed one; 'e. The appropriate annual interest rate is the prime rate established by the Bank of Canada at the time the grievance is filed. (I might say that some modification is needed here if the period of calculation is a long one and the interest rates have fluctuated dramatically, as they have in recent times.) Based on this formula, the grievor claims about $3,300 interest on lost wages. For the period of the discharge, we have $22,430.37 x 13.34% x 100 = $2,877.13 2 52 And for the period after our earlier award, we have $22,430.37 x 13.34% x 2 y $.460.34 (Note: This is the arithmetic suggested by Ms. Lennon. In fact, for this second interest cal- culation, one should use "$22,430.37 + $2,877.13" as the primary multiplier, because as of the date of reinstatement it is the lost~ wages pIUS in- terest which is the new fixed amount owing.) A total of $3,337.47 Conclusion It is not possible to be precise in this case, but this Board must come up with a final award which is fair and reasonable, and takes into account the decisions reached on the three matters before it. a After due consideration, I have concluded that the grievor's failure to mitigate his losses roughly balances what he is owed in overtime and interest. Therefore; I now find that the Liquor Licence.Board owes nothing more to the grievor. I cannot leave without expressing the feeling that this legal result does not really put Mr. Knudson back in the financial position he would have been in had the ter- rible injustice not occurred in the first place. His legal costs at the criminal trial alone were very heavy. However, the Liquor Licence Board is not responsible for this loss. The Grievance Settlement Board has jurisdiction only to decide upon the rights and duties of the parties before it, and to provide compensation within the framework of these rights and duties. Done at London, Ontario, this ti day of LL 1981. Vice-Chairman "Dissent to follow" M. M. Perrin, Member "I concur" B. Lanigan, Member D 9 EXHIBITS 1. File of newspaper clippings 2. Inspection Field Audit 3. h'otes of Mr. Knudson 4. Idem '5. Idem 6. Memorandum concerning Hours of Work, March 16, 1981 7. Memorandum re Lieu Days, March 9, 1981 8. Letter from O.L.B.E.U. re lieu days 9. Grievance re overtime, August 1, 1980 10. Documents related to settlement